In the fast-evolving landscape of cryptocurrency, the spotlight has just dimmed for prediction platforms like Polymarket and derivatives exchange Kalshi, which were rapidly nearing valuations of $20 billion. This decline comes on the heels of significant legislative action being taken by the U.S. Congress, as officials seek to rein in what they deem irresponsible betting on sensitive global events.
A Bill Targeting Crypto With a Lengthy Acronym
Senator Chris Murphy of Connecticut and Representative Greg Casar of Texas led the charge this week with the introduction of the BETS OFF Act, standing for Banning Event Trading on Sensitive Operations and Federal Functions.
This legislation aims to prohibit not only the act of placing or accepting bets—but also facilitating them—on events involving terrorism, assassinations, wars, or any scenario where the outcome is predetermined or controllable.
Moreover, its jurisdiction extends well beyond U.S. soil. Given that many transactions take place on offshore crypto platforms, the bill intends to adapt federal gambling regulations to include international framework, compelling payment processors to sever monetary ties with any offending platforms and potentially prosecuting U.S. individuals found promoting these businesses.
Additionally, any registered commodity exchange that lists such contracts would face immediate consequences, being barred from offering them altogether.
Suspicious Trades Raise Red Flags
This recent legislative push responds to alarming events that have caught the eye of lawmakers in Washington. Reports emerged detailing large bets placed on Polymarket right before significant military actions, including the U.S. strikes on Iran and the extraction of Venezuelan President Nicolás Maduro. These bets, placed by anonymous users, yielded substantial profits, alarming authorities concerned about the blurred lines between governance and gambling.
Murphy articulated the inherent dangers, emphasizing that individuals with governmental connections profiting from insider knowledge could exploit situations for personal gain, undermining public trust and potentially skewing policy decisions in their favor.
The general public appears to echo these concerns; a survey conducted by Data for Progress revealed that 61% of independents and 57% of Republicans back a ban on wagering related to government actions, with an even stronger consensus—80%—against betting markets associated with terrorism or assassinations.
A Growing Wave of Legislation
The BETS OFF Act is merely the latest action taken in a rapidly evolving legal landscape. It marks the fourth significant legislative proposal focused on crypto prediction markets within the past three months.
Previous initiatives included a bill introduced by Representative Ritchie Torres of New York aimed at preventing federal officials from betting on government-linked markets, a move inspired by a trader who turned a $30,000 stake into over $400,000 betting on Maduro’s fate. Coupled with bipartisan proposals from Representatives Blake Moore of Utah and Salud Carbajal of California, which mandate that the Commodity Futures Trading Commission bans contracts relating to terrorism and other sensitive subjects, the momentum is palpable.
Furthermore, in March, Senators Adam Schiff and Mike Levin introduced the DEATH BETS Act, targeting contracts linked to war and individual deaths following an extraordinary $529 million in trades related to Iran on Polymarket in a short window.
As Congress continues to scrutinize the implications of such markets, the future of crypto prediction platforms hangs in the balance, raising questions about regulation, ethics, and the very nature of speculative trading in sensitive geopolitical contexts.
